This question isn't so much about how to achieve the effect of making a scene look like it's modelled in miniature, but why tilting the focal plane creates the effect. What is it about photographing miniatures that makes them look like miniatures, and how is this replicated by tilting the focal plane?

I can understand how when photographing a model of a scene, you have a much higher magnification, which leads to a shallower depth of field compared to when capturing the real-sized scene, but how does tilting the focal plane help? Is it just that you have the focal plane tilted relative to the plane that most of your subject is on, so that you can achieve a narrower depth of field for the focal length and aperture, or is there more to it than that?

It also helps to boost the saturation after the image is captured, as miniatures typically have unrealistic colors in them that are brighter and more saturated than in the real world.
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dpollittMar 7 '12 at 20:53

3 Answers
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The reason tilt-shift "sells" the miniature effect to the eye is that it allows both the foreground and background to be out of focus. We are accustomed to seeing images of city scenes, for example, where the foreground is a bit blurry, or the distant background is out of focus, but not both. Normal lenses shooting these scenes near infinity focus will have enough depth of field that you wouldn't have a situation where both foreground and background are strongly out of focus.

When photographing real miniatures, you are focusing much closer so have much narrower DOF, so you do get background and foreground out of focus.

I believe the tilt-shift lens achieves this effect because it creates a plane of focus that is not parallel to the sensor, so it exaggerates out of focus areas. I believe you can further limit the DOF by focusing closer then using the tilt to move the in-focus area to your subject. So a combination of closer focus and stretching the plane of focus so that less of it coincides with the sensor.

I'm a little late, but wouldn't this mean that if you'd never really seen pictures of miniatures before you wouldn't identify tilt-shift pictures as looking like miniatures? This seems strange, as there's something definitively "small" about this (upload.wikimedia.org/wikipedia/commons/b/b2/…), beyond associations with other images of small things. Maybe when you're actually looking at miniatures you see the optical effect you speak of?
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jclancyJul 6 '13 at 21:43

That's exactly right. Shifting the focus plane causes shallow depth of field which is a visual cue for higher-magnification / closer subject distance. Wikipedia and the links therein has everything you need to know. With a tilt-shift lens you can also achieve the opposite effect, getting a wider depth of field by tilting it the other way.

It's a combination of factors. For a miniature effect, you normally want to take the picture where you're aiming the camera down toward the subject matter from above (but at an angle, not straight down). That places your plane of focus at a fairly long angle to the ground -- in most cases you'll have only a little of the nearest foreground and farthest background looking blurry.

To get a miniature effect, you tilt the lens "up", so the plane of focus is nearly vertical. This gives the appearance of less depth of field (but it's important to note, doesn't really reduce the depth of field, just changes the angle of the plane along which if falls). Even though most people don't know it consciously, some part of their brain still recognizes that (apparently) narrowed depth of field as a signal that this is a closer picture of a smaller item (which will reduce the actual depth of field, not just its appearance).